The 80,000-seater Olympic Stadium was built as the main venue for the 2000 Summer Games in the populous west of the city, while the 44,000-capacity SFS was constructed in 1988 in the wealthier east.
The Olympic Stadium will be replaced by a 75,000-seater structure, possibly with a roof, at a cost of A$1.5 billion starting in 2019, with the construction of the new SFS getting underway next year and scheduled for completion by 2021.
The move to redevelop both stadiums has been heavily criticised by Sydney mayor Clover Moore, who accused the local government of blowing out the budget to pander to the influential Sydney Cricket Ground Trust, which owns the SFS.
The new SFS will have two modes, a 30,000-seat "club" layout with a screen masking the top tier of seats which would be removed to allow 15,000 more fans to watch marquee football and rugby matches.
Rugby Australia chief Bill Pulver said that with a 30,000-seater stadium already under construction in Parramatta, two more state-of-the-art venues would only improve the country's chances of attracting major international events.
"By 2022, Sydney will have three new world-class stadiums in action... ensuring the best possible experience for rugby fans and enabling us to bring the biggest rugby tournaments in the world to Australia," he said.
"Crucially, it positions us well for future Rugby World Cup bids."
Australia co-hosted the first Rugby World Cup in 1987 and were sole hosts in 2003, when the final was played at the Olympic Stadium.
(Reporting by Nick Mulvenney; Editing by John O'Brien)
